Detroit and the Special-Interest State

George Will titled a recent column "Detroit's death by democracy," and noted that the collapse "pose[s] worrisome questions about the viability of democracy in jurisdictions where big government and its unionized employees collaborate in pillaging taxpayers."

His point is apt but insufficiently gloomy. It skirts the real fear that is and should be on the collective American mind: that the interest-group capture and despoliation of Detroit has evil implications for the viability of American democracy as a whole, not just in a few cities, and that we are on the edge of serious, and perhaps even violent, upheaval.

The potential defects of democracy have been known since ancient Greece. People learn that they can vote themselves benefits, paid for by some vague "they." Majorities seize on the language of democratic legitimacy to justify looting minorities. The polity is torn apart by factions bent on seizing control and turning government to their own ends. The situation can easily turn into rule by a mob, swayed by the latest demagogue, or into a contest among competing mobs.

The citizens are busy with their daily lives and cannot be expected to keep up with the intricacies of all public issues, so power must be delegated to a political class, which will tend to become corrupt. The more the government does, the greater the loot to be gained by the corruption, and thus the greater the temptation to undertake even more so as to increase the haul.

Collective-action problems are endemic: As a group we want honest and neutral government, but as individuals we want that for everyone else while we ourselves get special treatment, so the temptation to undermine democratic virtue is constant.

It is a daunting list of forebodings, but, as the aphorism has it, democracy is the worst form of government except for all the other possibilities. The problem for practical statesmen and -women is how to neutralize the threats.

The Founders of the American Republic were thoroughly steeped in political theory, and the Constitution is their response. They set up multiple barriers to prevent these fears about democracy from coming true.

One barrier was to divide power among state and federal sovereignties and among different governmental institutions. They made it difficult for any faction (or special interest, to switch to modern terms) to capture enough of the government to work its will without broader consent.

The second was an abhorrence, in both legal doctrine and political ethos, of legislation promoting any particular interest as opposed to the general welfare. With this went a horror of what they called "systemic corruption" -- situations in which special favors were handed out and then some of the profits re-channeled back to maintaining the political entrepreneurs who handed out the favors.

A third barrier was limitations on the duties and scope of government. Government was law, defense, money, and other societal infrastructure, but it was not the prime mover in any sector. Its job was to enable the economy and society to function, not to take over.

These barriers to the destruction of democracy were the pillars of the Old Republic, and they lasted pretty well right up until World War II, though they often bent under the strains of population growth and industrialization.

Then, under the pressure of the war, the Cold War, the Great Society, environmentalism, the civil-rights revolution, feminism, and unionism, the principles crumbled. Indeed, to a large degree the doctrines reversed. The job of government became not to pass laws for the general welfare, but to identify particular worthy groups and empower them. Benefits were bestowed on special interests and routinely fed back into the political system to maintain the power of the bestowers. And government was regarded as the prime mover of every social and economic system from the economy to health care to agriculture to telecommunications.

Capture by faction has become endemic. As government has grown and budgets and regulatory empires have expanded, economic and ideological factions have carved off satrapies in the agencies and congressional subcommittees. The true greens control EPA. Unions have Labor and the NLRB. The banks have the Fed and Treasury. The energy companies used to have the Department of Energy, but now it is in the hands of the green crony capitalists. Farm policy is controlled by a coalition of agricultural interests and food-stamp advocates. HUD serves housing industry and urban constituencies. HHS and its state satellites are a tool of the health-care industry -- my state senator in Montana deals with 63 health-care lobbyists, all of them focused on one thing: more money from the state. Academia, teachers' unions, and the consulting industry control the Department of Education. Public employees have become a powerful interest group in themselves. And so on.

Conservatives keep arguing about Obama's political philosophy, but they miss the point. His strength is that he has none. He has no views on environmental or labor or health or education policy; whatever the interests that have been given that part of the government want is all right with him. His job is to assure each member of his coalition that it will indeed be given freedom of action, to mediate the occasional conflicts, and to serve as a mouthpiece when interest-group talking points are put on his teleprompter.

The system of capture by faction is also leading to huge and growing systemic corruption, as the beneficiaries tithe to whoever promises to keep the benefits flowing. Business has given up on efforts to support a market economy and devotes itself to competitive crony capitalism. For example, as George Gilder recently wrote in Knowledge and Power, the alternative-energy scams are ruining Silicon Valley by triggering a "general Gadarene rush for green subsidies" and "transform[ing] venture capitalists from heroic contributors to American innovation . . . into a pack of grubby petitioners for pork."

The rise of this special-interest state was not totally without a justifying political theory. It was accompanied by a school of analysis called "interest-group liberalism," which posited that the various interest groups elbowing each other on the way to the trough would produce in the political system the self-regulating efficiencies that free-market competition produces in the economic sphere. This was always just a metaphor, not a real analysis, and it does not stand up as a serious philosophy.

So here we stand, in the ruins of Detroit. And in the soon-to-be ruins of a health-care system destroyed by a combination of ideologues and industry lobbyists -- the type of iron alliance that economist Bruce Yandle tagged "Bootleggers and Baptists." And, if we avoid the ruins, we will find a desert created by an EPA that opposes all realistic forms of energy and wants to destroy all industrial facilities, dotted with the heaps of capital misallocated by the zero-interest policy and the need to keep the banks rich and housing prices up.

No depredation is too shameful as congressional employees maneuver to exempt themselves from the problems that Obamacare foists on the rest of the nation, and as BART employees, whose pay and benefits average almost $100,000/year, are willing to shut down San Francisco to improve their take.

Systemic corruption grows like cancer. The Democrats are the real beneficiaries of the Citizens United decision, which freed up contributions for political causes, because those who make contributions as an investment on which they expect a fat payback will outspend those acting pro bono publico.

The logical outcome of these trends is Detroit writ large. The special-interest state feeds on itself as more groups give up -- they stop opposing those who capture government and join them, grabbing a share. As the situation deteriorates, an end-game situation develops in which the direness of the situation actually encourages greater irresponsibility. If things are going to crash, then every interest has an incentive to grab as much as it can as quickly as it can. It is a familiar commons problem: The more that other people add cows to an over-grazed pasture, the greater your incentive to add even more of your own cows before all the grass is eaten. Restraint is a sucker's game.

So, the big question: What is our answer to the ancient political theorist, or perhaps the Chinese official, who looks at our current situation and shrugs: "See, I told you democracy wouldn't work. You have no principles that can get you out of this mess, so now you have no choice but to let the situation play out into chaos, instability, and upheaval, probably followed by authoritarianism. An authoritarian government would be corrupt, but the total drain would be less than the chaos and damage of an infinite number of interest groups fragmenting the economy and society in contradictory ways, so people would embrace it for the sake of order. They always do."

My answer, and I think it is the answer of the Tea Party, is that we must rebuild the pillars of the Old Republic by: moving away from particularistic legislation and back toward a requirement of the general welfare; bringing regulatory agencies under control; engaging in a massive purge of subsidies; eliminating the current tax system with its multitude of distorting provisions; cutting back government to essential functions; and curbing systemic corruption by eliminating the favoritism on which it feeds.

The establishments of both parties regard this position as hopelessly naïve. The Democrats have turned into the party of interests, and are, like their leader, devoid of any serious political philosophy. The party merely believes that its members are good and deserving and its opponents are mean and evil.

The Republican establishment also lacks any comprehensive philosophy. It merely opposes taxes and has a desire to change the conversation to social issues. To be fair, it also opposes expansions of the special-interest state, usually, but an occasional victory on that front merely stalls the ratchet momentarily. There is no long-term strategy on this front.

The Tea Partiers suspect, with reason, that the Republican establishment is actually playing an end-game strategy. It has no hope of reversing current trends, and no idea of how it could actually accomplish this, so it collects money from its donors, spends money on ads, and rakes off commissions and fees. It undermines Tea Party candidates who would rock the boat in the interest of keeping things going just a bit longer.

My view is that the future of democracy rides on the Tea Party, a most unusual mass movement devoted to good government rather than any particular interest, and on such principled political figures as Ted Cruz, Sarah Palin, Rand Paul, Alan West, Nikki Haley, Tom Coburn, Bobby Jindal, Tim Scott, and some others who are coming up through the political farm-team system.

They are the ones who must persuade their own party that we are in a crisis that must be confronted. Only then can the Republicans, or a new party, succeed in the business of convincing the electorate as a whole that the special-interest state is unsustainable and that the future of democracy depends upon the reinstatement of what was once called civic virtue, which consists of a sober sense of restraint on what we ask of government in return for similar restraint on the part of others.

If there are some good new ideas about how to re-fashion a working democracy, let us hear them, but until we do, going back to some of the old principles seems like a good start.